Two years ago, just 10% searched online before coming to a car dealer. Now 40% users search online before coming to an offline dealer.Anand J&Digbijay Mishra | TNN | April 28, 2016, 09:54 IST

The slowdown in venture funding is compelling startups in a range of segments to consolidate, but there's one category that appears to be doing extremely well -auto portals.

Thanks to a big shift towards online searches and purchases of cars, the two major players in the space, CarTrade and CarDekho, are growing rapidly and between them they may hire up to 2,000 people this financial year.

Most of this will be in sales, client acquisition, and customer engagement, while about 10% of the hires would be to improve their tech platforms.

Mumbai-based CarTrade, funded by Tiger Global and Warburg Pincus, has 2,000 employees now, including the 600 it added when it acquired CarWale late last year for $90 million.

The company plans to hire more than 1,000 people, may be even up to 1,500 this fiscal, its CEO and founder Vinay Sanghi told TOI. While CarTrade is into used cars, CarWale is into new cars. Between them, they see 16 million unique visitors every month.

CarDekho, which acquired Times Group-owned ZigWheels last year, had asked a few underperforming employees to leave earlier this month. But Amit Jain, founder & CEO of GirnarSoft, the parent of CarDekho, says the company is growing its overall headcount aggressively. Jaipur-based GirnarSoft has grown from a 1,200-strong team in March 2015 to 3,000 in March 2016.

"By the end of the first quarter of 2016-17, we will be a 3,500 member team," Jain said. CarDekho is by far the biggest business of GirnarSoft.

"Last fiscal has been the best year for GirnarSoft. We doubled our revenue and traffic and launched several new verticals across the company . We believe we are one of the most stable startups in the country, burning the least when compared to any other startup of our size," Jain said.

The growth is coming as customers' shift to online searches and purchases. "Two years ago just 10% searched online before coming to a car dealer. Now 40% users search online before coming to an offline dealer," said Sanghi.

This gives the portals an opportunity to monetize in three ways. Dealers feel compelled to be on the portal, since many customers are coming through that route. The portals charge the dealers a listing fee. For car makers, the portals have become an attractive advertising medium.

The portals have also enabled transactions through them, and when transactions happen, they charge a commission of 1.5 to 2.5% from the dealers. Sanghi said the dealer listing fee, advertising and transaction commission each constitute about a third of the revenue. Sanghi said car manufacturers are among the biggest advertisers in the country, with 15% of their ad budgets being spent online last year.

"Used car loans is a big opportunity going forward. We are also expanding our bikes segment this year," he said. Karthik Reddy, managing partner at Blume Ventures, noted that these companies were bootstrapped for most part of their initial stage and were built on solid fundamentals, making money as classifieds portals. CarDekho, founded in 2005, raised its first funding of $15 million only in 2013.